Iraq heading for $10B+ deficit, economist warns

Shafaq News – Baghdad

Iraq is heading toward a financial deficit exceeding 15 trillion dinars ($11.4 billion) by the end of 2025, economist Manar al-Obaidi said on Saturday.

According to al-Obaidi, Iraq is entering a financially uncertain year as the 2026 budget may be delayed due to ongoing government formation. With the real deficit already exceeding 10% of total revenues, the crisis now “threatens the state’s ability to pay salaries.”

Figures from the Central Bank of Iraq (CBI) show the bank purchased only $49 billion from the Finance Ministry in the first nine months of 2025, while selling more than $60 billion through its foreign-currency window, forcing it to use about $11 billion from its reserves.

With oil prices hovering between $60–65 per barrel, covering essential operating expenses will become increasingly difficult without rapid measures to raise revenues and cut spending, al-Obaidi cautioned, noting that borrowing is no longer easy as domestic debt has exceeded $68.7 billion and the market’s capacity to absorb more is shrinking.

He said the solution requires a detailed audit of public expenditures to identify waste, particularly in ghost salaries, pensions, and social-welfare programs that funnel money to ineligible recipients or are used for political purposes.

“If the crisis is not addressed quickly and responsibly,” he warned, “the state will be forced into harsh measures that will hit the poor and unemployed before employees.”

Read more: Iraq’s budget: Political fiscal gaps threaten national stability in 2025